The cozy relationship between Enron and the Andersen accounting firm looks like puppy love compared to the affairs some companies seem to be carrying on with their accountants.

Much has been made of the fact that Enron paid Andersen $25 million to audit its books and $27 million in consulting and other fees in 2000.

Auditors determine whether a company's financial statements comply with accounting rules. Even though companies pay for their own audits, auditors are perceived as providing an independent review, and their sign-off on financial statements is seen as a stamp of approval.

When auditors also get paid for other services -- such as management consulting, tax advice and even installing software -- there's a fear they may go easy on the audit.

The unproven theory is that Andersen let Enron fudge its financial statements because it didn't want to jeopardize its juicy consulting fees. But at some companies, by some measures, the auditors are even more dependent on nonauditing fees.

On average, large publicly held American companies paid their accountants almost three times more for consulting and other nonauditing services than they paid for auditing in 2000, compared to Enron's ratio of roughly 1-1.

In the Bay Area, 15 of the 16 biggest companies paid a total of $197 million in nonauditing fees and only $36 million in annual auditing fees. The average ratio was more than 5 to 1. (Hewlett-Packard was not required to disclose auditor fees last year because its fiscal year ended in October, but it will this year.)

Cisco Systems paid PricewaterhouseCoopers $16.8 million in nonaudit fees and only $1.8 million for its audit, a 9-to-1 ratio.

Wells Fargo paid KPMG $37.5 million in nonaudit fees and $4.1 million for auditing, also 9 to 1.

Gap paid Deloitte & Touche $7.7 million in nonaudit fees, and got its audit done for the bargain rate of $569,000, a 13-to-1 ratio.

Apple Computer paid KPMG $28.5 million in nonaudit fees, including $21.5 million for technology services, and just $2.3 million for auditing. That's 12 to 1.

Apple, Cisco and Gap had no comment on their fees. Wells says about $25 million of its nonaudit fees was a nonrecurring charge for consulting and employee training related to its merger with Norwest.

Thanks to a new Securities and Exchange Commission rule, it's easy to find this information. Companies must disclose in their annual proxy statements how much they paid auditors during the year for three types of services -- auditing, financial information systems design and implementation (basically information technology) and other services, including consulting.

Proxy statements are those black and white pamphlets mailed to shareholders before the annual meeting that tell about coming elections and how much top executives were paid. The new disclosure requirement applies to proxies filed Feb. 5, 2001, or later.

Virtually every company, in its proxy statement, says its board audit committee "considered" whether nonauditing fees might compromise its auditor's independence. But they don't say what their audit committees concluded -- whether or not there is a conflict of interest.

The SEC wanted companies to state a conclusion, but backed down under pressure from lobbyists. Companies "didn't want the liability of making that statement," says Ed Durkin, who represents the United Brotherhood of Carpenters pension fund.

The Big Five accounting firms say they have internal walls that separate their auditing and nonauditing activities, which eliminate conflicts of interest.

Without better disclosure, it's impossible to know whether conflicts actually exist. But investors can look for clues in the proxy statement: -- Start with the ratio of nonaudit to audit fees.

Durkin says anything higher than a 1-to-1 ratio raises a red flag. But that means just about every big company is suspect. Among the 16 largest Bay Area companies, only McKesson HBOC and Intel are around 1 to 1. -- Next, look at the sheer amount of the fees, in relation to the company's size. Compare it to similar companies. -- "The ratio at Enron wasn't bad, it was the numbers: $25 million on the audit, plus $27 million on nonaudit. When you looked at the totality," it raised eyebrows, says Pat McGurn, vice president of Institutional Shareholder Services, which advises large investors.

Few companies paid more for an audit than Enron, but then few companies are as complicated. One that is: General Electric, which paid KPMG $24 million for its audit, $11.5 million for technology services and $68.2 million in other fees.

If possible, scrutinize "other" fees. Companies are not required to break out other expenses, but some of the more progressive ones do.

Companies say the SEC's definition of "audit" services is narrow, and that the "other" category includes certain activities closely related to auditing, such as tax-related services and auditing pension and other benefit plans.

But it also includes activities that have little or no relation to auditing,

such as general consulting, a service offered by many nonauditing firms.

"Other" also includes fees paid to outside auditors hired to do a company's internal auditing. Although legal, within limits, this practice is controversial because the supposedly objective outside auditor ends up reviewing its own employees' work, says Susan Parker, an assistant accounting professor at Santa Clara University. Few companies break these fees out. -- Pay special attention to technology fees. Tech consulting is another job virtually unrelated to a company's financial statements. It's offered by many nonauditing firms at competitive prices.

"There aren't many synergies to having your auditor provide that service," says McGurn.

And technology consulting fees "can be enormous," Parker says.

Bottom line: McGurn says investors should look for anything "out of the ordinary -- an extraordinarily large combination of fees or any of the three (categories) that's big."

Shareholders who object to a company's nonauditing fees can do several things: -- Vote against the ratification of auditors.

"It's symbolic, but these companies are going to start getting the message, even if the ratification votes slip by 10 percent," says Durkin of the carpenter's union.

One problem: Companies don't have to let shareholders vote for auditors, and about half don't.

-- Withhold your vote for the re-election of directors who are on the board's audit committee. -- Vote in favor of shareholder resolutions banning companies from hiring auditors for nonauditing work.

A group of trade union pension funds, including the carpenters, are proposing such resolutions at about 30 companies, including Apple and PG&E.

Shareholder resolutions rarely pass, but they too can send a powerful message.

PROXIES ONLINE

You can get any public company's proxy statement at
www.sec.gov
. Under "Search for Company Filings," click on "Quick Forms Lookup." Enter the company's name, and under Form Type, select Def 14A. In most cases, click on the first underlined document.